More stimulus may be needed says BoE's Dale

THE full impact of the Bank of England's asset purchase programme has yet to feed through to the economy but further stimulus may still be needed, the bank's chief economist said yesterday.

Sticking closely to previous comments by bank governor Mervyn King, Spencer Dale said the bank's decision to halt its quantitative easing scheme on 4 February did not necessarily mean the policy had ended.

"The monetary policy committee stands ready to make further asset purchases should the outlook warrant them," Dale told a conference in Cambridge.

"A pause in monetary loosening does not necessarily mean that loosening has come to an end. It will all depend on how the outlook for inflation evolves."

The Bank of England began buying bonds with newly created money in March 2009 in an unprecedented attempt to pull the economy out of a deep recession. It paused the programme last month, having bought almost 200 billion of gilts, more than a quarter of the entire market.

Although the economy returned to growth at the end of last year, the recovery remains fragile. Dale said there were many signs the quantitative easing programme had been effective – asset prices have increased, companies have had easier access to debt and equity markets and confidence has recovered – but there was "still a long way to go".

Judging when to start tightening monetary policy would be difficult, Dale said, and could be done via a mixture of raising interest rates and selling assets "at any time, in any order".